The Welsh Government’s New Exporters Programme is set to help small firms reach new international markets. Here, Samantha Noble, area director at Lloyds Bank, looks at some of the benefits exporting can bring for SMEs and provides advice on how to make the most of overseas opportunities.
The Welsh Government’s New Exporters Programme, launched in July, is set to encourage first-time exporters to expand their footprint beyond the Welsh borders. While this is an initial trial involving just a handful of businesses, we hope that it will open the door for more Welsh firms to explore international markets for the first time.
There is a generally positive attitude towards exporting among businesses across the country. A report by Lloyds Bank and Aston Business School earlier this year revealed that 67% of Welsh firms say that they believe exporting firms have more growth opportunities, while 42% expect to find new opportunities overseas.
International trade can offer a sense of security for firms, particularly in such an unpredictable landscape. Exploring new export opportunities can ensure that they have a wide range of revenue sources, offering protection should demand drop in their domestic market.
While it may feel like a step into the unknown for those dipping their toes into foreign waters for the first time, there are a few simple steps businesses can take to help them prepare for and make the most of these opportunities.
One of the first steps to selling overseas is identifying the right markets to target. It is important to thoroughly research factors such as market trends and local competition to determine where the strongest demand for your products lies. Legal requirements can also differ from one market to another, so you will need to carefully consider how these could impact your operations.
At Lloyds Bank, we’ve developed an International Trade Portal, which gives firms information on everything from trade shows to potential overseas business partners to help inform export strategy right from the start.
Another important step is to understand how selling to customers overseas can be different from within the UK. For example, export deals can take longer to complete than domestic trades, in part due to the distances involved. Slower deliveries, and as a result slower payment, can put a squeeze on cashflow by lengthening the working capital cycle – the amount of time it takes to turn your assets into cash.
Here, a specialist tool like post-shipment finance could be useful. Post-shipment finance can advance payment for goods once they’ve been shipped to a customer, bridging the gap between production and receiving final payment.
It’s also essential that exporters have access to finance to kick-start their exporting activity. Financial tools such as invoice finance or asset-based lending can be used to release excess working capital, freeing up funds to invest in international growth.
When trading in different currencies, solutions to help process regular foreign transactions can help mitigate the effect of fluctuations in exchange rates. There are also tools to help minimise the implications of trading across time-zones and managing late payments.
Taking time to consider the right markets for your business and the impact sending your goods abroad will have on cashflow can help firms build a strong foundation for overseas success. But they don’t have to go it alone. At Lloyds Bank, we aim to be by the side of Welsh SMEs as they pursue their international ambitions.
There are opportunities abroad, and by planning ahead and making the most of the support available, more firms here in Wales can step into the global marketplace.
